Swiss Welcome Takeover of Syngenta as Ties With China Deepen

August 17, 2017

August 17, 2017 by Bloomberg

Switzerland is welcoming ChemChina’s $43 billion takeover of Syngenta SA, the Alpine nation’s biggest-ever deal, with open arms. The only continental European country to strike a free- trade agreement with China, Switzerland has long been an attractive hunting ground for companies from the Asian giant. Unlike the U.S., which has blocked Chinese deals and where the ChemChina’s Syngenta purchase may face regulatory hurdles, the Helvetian nation has seen a slew of Chinese buyers of Swiss companies in the last five years -- from HNA buying airport services company Swissport to Baoshida taking over Swissmetal. In the latest all-cash purchase, state-backed ChemChina, or China National Chemical Corp., won the Swiss over by pledging to keep Syngenta headquarters in Switzerland, a sticking point in discussions with previous suitor Monsanto Co., which eventually walked away from a deal last year. While ChemChina may face headwinds in North America, where Syngenta generated $3.6 billion in sales last year and has two units, the Swiss are supporting the transaction.

“The buyer is a rock-solid, well-positioned company, so this is a good deal,” Swiss Economy Minister Johann Schneider- Ammann said on Wednesday.

No Outcry

In added assurances, ChemChina, which bills itself as China’s largest chemical company, has promised to guarantee Swiss jobs, the minister said. The approach of Chinese companies to make gradual rather than brutal shifts fits in with a Swiss view of business, said Joachim Rudolf, owner of business and investment adviser ChinaIntelligence. “Chinese companies are not known to change everything from day one. They observe and listen,” he said . “I don’t anticipate a public outcry or political resistance.” From acquisitions of watch companies to double taxation agreements, ties between Switzerland and China have been strengthening in recent years.

Buying Swiss Inc.

Before the Syngenta takeover, there had been at least seven purchases of Swiss businesses by Chinese companies in the five years since 2011. Last year, Wanda bought Swiss sports marketer Infront for 1.05 billion euros ($1.16 billion). In 2014, CSSC bought a majority stake in Winterthur Gas & Diesel for 46 million euros.

U.S. Reception

In the U.S., Chinese companies have had a cooler reception. In January, Royal Philips NV canceled a planned $2.8 billion sale of its Lumileds lighting-components unit to a consortium led by GO Scale Capital of China because of opposition from a U.S. regulator charged with vetting foreign acquisitions to protect national security. In 2009, the U.S. opposed China’s Northwest Non Ferrous International Investment’s attempt to buy Firstgold Corp., which had property near Fallon Naval Air Station in Nevada. In 2012, it blocked Chinese-owned Ralls Corp. from building a wind farm near a naval base in Oregon.

Stronger Ties

In contrast, the Swiss have sought to cement their ties with the Chinese. In October, China Construction Bank Corp. became the first Chinese bank to receive permission to offer commercial-banking services and clear renminbi transactions in Switzerland. Swiss companies have also made a beeline for China. More than 85 percent of ABB Ltd’s activities in China, where it employs 20,000 people, are fully localized. Chief Executive Officer Ulrich Spiesshofer described China as a “very strong partner” and said the maker of robots and power grids would continue to invest there. “China’s not something foreign,” Spiesshofer said during ABB’s full-year results conference. “It’s part of the pattern of how we run our company.” For ChemChina Chairman Ren Jianxin, there’s more to come. “Our investment into Syngenta will drive more Chinese companies to invest in Europe,” he told journalists at Syngenta’s headquarters in Basel on Wednesday.